Why it is so complicated to develop business between the emerging & the evolved markets?

May 22nd, 2012

Global $49.5B MRO industry is expected to grow to $68.4B over the next 10-year period. According to the forecasts of aviation experts, engines and component segments are expected to maintain the highest growth rate. Despite these optimistic expectations, the Western World is still struggling to recover economically. Forming new business relationships with partners and setting up businesses in the emerging markets is naturally challenging when global companies have to leave their comfort zone and leave behind their own business standards and ethics. But why is it so complicated to establish business between the emerging & the evolved markets?

Such issues as the intellectual property rights, bureaucracies, cultural differences and language barriers may be cumbersome to deal with. Regardless of these concerns, the possibilities are immense and nothing seems to stop the investments into the emerging markets, where the overall tendency is pure growth.

The changes and growth are the only results that the local economies expect in the region

‘The changes and growth are the only results that the local economies expect in the region. The recent establishment of the joint ventures with the global aviation companies (like Ural Boeing Manufacturing, ECAR or The Airbus (Beijing) Engineering Centre (ABEC)) clearly prove that western companies strive to strengthen its international ties and build long-term relationships with the key suppliers,’ says Agne Jonauskaite, Head of Regional Sales Division at Locatory.com

According to A. Jonauskaite, even if new business relationships with partners may provide a number of advantages (access to technologies, patented processes, and partners’ distribution network), western companies should leave the ’I’m from the West, I know best’ attitude at home. Entrance into the emerging markets is a new learning experience as companies must find the best ways to adapt to new cultures and navigate their businesses according to new rules and regulations.

‘Who is better than a Brazilian to advise you on the Brazil documentation requirements? Who speaks Indonesian better than a native? Globalization in aviation has connected us all in the ways we could have never imagined. However, this globalization process has also brought challenges regarding intercultural communication and understanding. There are 3 main reasons why the communication between the emerging and the evolved markets is complicated at the moment - the geographical distance, the language barriers and the cultural differences,’ comments A.Jonauskaite.

According to the Internet World Stats, if in 2000 the Asian region had only 114 million internet users, now it is estimated to have more than 1 billion

There are two main solutions to dealing with these issues: establishing representative offices or using the universal language – technology. Both ways seem very attractive, but more and more companies prefer to use the second one. Although technology is regarded as the key enabler for any business, in aviation it is an absolute necessity - the entire aviation sector is going to see tremendous development in the information systems and technology.

‘According to the Internet World Stats, if in 2000 the Asian region had only 114 million internet users, now it is estimated to have more than 1 billion! In Africa, the number of internet users has increased 30 times in the last 11 years, in Europe –almost 5 times, in the Middle East – 23 times, and in Latin America and the Caribbean – 13 times. Meanwhile, in North America the number of internet users has only doubled. As you can see, the numbers in the emerging markets are quite impressive, but some emerging markets still feel the lack of internet broadcast!‘ comments A.Jonauskaite.

The internet and modern technology have opened up new marketplaces and allow promoting businesses to new geographic locations and cultures worldwide. By embracing information technologies, companies can serve their customers without them having to leave their working desks and drop everything just to attend a meeting.

‘Access to aviation industry is vital for the emerging markets as the development of the sector itself is directly dependent on the information systems and technology,’ concludes A.Jonauskaite.